THE DRIVEN ELEMENTS OF THE MONETARY POLICY IN THE CONTEXT OF ISLAMIC ECONOMICS

Abstract

This paper claims that to propose an alternative way through the establishment of monetary policy. The definition of rationale human behavior in conventional system and the definition of rational human behavior in Islamic economic system are different in many ways so that the driver dynamics of the conventional economic system and Islamic economic system are differentiating. The demand of money which is the crucial point for conducting monetary policy in two systems is driven with different necessities. Due to stability of demand of money and robust financial system in the context of Islamic banking system, monetary policy can be more effective through providing price stability. Monetary policy in the context of Islamic finance do not commit just price stability but also commit more equate socio-economic justice and equitable distribution of income and wealth and optimum rate of growth. 

Keywords

• Islamic,monetary policy,money,demand

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